Retail Financial Statement Analysis & Consulting

calgary retail consulting financial statement analysis

Economics & Finance of Marketing - ROI

Two years ago, while I was working with a retail client on sales strategies, I asked her what level of inventory turn-over would would make her satisified with the performance of her sales staff.

I then asked how much that meant for each sales person, and how much the sales people were currently selling.

Finally I asked her how much inventory she was carrying. I quicky calculated that she was carrying 18 months of inventory!

I was only half as shocked with that answer as I was to her answer for the next question.

"Hasn't your accountant ever said anything to you about this?"

It turns out that her accountant did not inform her that there was a very simple solution to a major problem and, her accountant, who was a CA, had not suggested that analysing financial statements from a marketing perspective could save her thousands of dollars.

calgary retail management business consulting

Remember:

Everything you do at the front-end will find its way to your financial statements.

Work both sides of your business for maximum profit.

It is very difficult to do effective marketing without considering the financial costs and expected returns of a project. Going in, all we can know are the costs. What the return on your investment will be is a matter of your past experiences and, if you try something new, what a little research tells you to expect.

The cost of anything has to be the main factor in decision making. Excel spreadsheets are the best way to start. The biggest problem that can arise is the complexity of variables in decision making. Sometimes, one variable combines with another to change the results.

For example, combining an e-commerce promotion with and in-store promotions often out performs an e-commerce promotion done for one month and an in-store promotion done for the next month. If you add a third element with the e-commerce promotion and in-store promotions then the whole is often better than the sum of the parts. But costs have to be managed.